Economist Stiglitz Says Iraq War Costs May Reach $5 Trillion

March 1 (Bloomberg) — Nobel economics laureate Joseph Stiglitz, author of a new book that claims the Iraq war will cost the U.S. more than $3 trillion, said the final tally is likely to climb much higher than that.“It’s much more like five trillion,” Stiglitz said yesterday in an interview with Bloomberg Radio. “We were trying to make Americans understand how expensive this war was so we didn’t want to quibble about a dime here or a dime there.”

His analysis comes as the Senate debates a Democratic plan to begin withdrawing troops from Iraq. The 2001 Nobel winner’s initial estimate of $3 trillion drew criticism from Republican Senator Sam Brownback of Kansas, who said that the number ignores the price the U.S. would pay if Iraq became a terrorist state.

“Three trillion is a lot of money no matter how you look at it,” said Stiglitz, 65, a former economics adviser to President Bill Clinton. The conflict has driven the nation’s energy costs higher by adding $5 to $10 to the price of a barrel of oil, and may enlarge the national debt by $2 trillion in the year 2017, he said.

“This war is the first war ever that’s been totally financed by borrowing, by deficits,” said Stiglitz, a professor at Columbia University in New York. “Because we haven’t raised taxes, because we’ve tried to pretend this war is for free, we’ve been skimping on our treatment of veterans.”

Bills Pile Up

Bills from the Iraq war will pile up for decades to come as the government spends hundreds of billions of dollars providing medical care and disability benefits to about 70,000 soldiers injured in the conflict, he said.

The government also will have to pay back with interest money it borrowed to finance the war, which will drive total costs higher, he told Congress’s Joint Economic Committee earlier this week.

The Congressional Budget Office said last month that $752 billion will have been appropriated so far for the Iraq war, the conflict in Afghanistan and other activities associated with the war on terror once lawmakers approve the remainder of President George W. Bush’s 2008 war-funding request. The administration’s request for $70 billion more for fiscal 2009 would push that past $800 billion.

Stiglitz and co-author Linda Bilmes release their new book, called the “The Three Trillion Dollar War: The True Cost of the Iraq Conflict,” starting this month.